Aviation and Economic Development in Alaska

By Nolan Kouda, CED Executive Director

 A float plane flies high above Alaska

A float plane flies high above Alaska

Near the intersection of O’Malley and Lake Otis in South Anchorage sits an unassuming business. If not for the Airglas sign, you might not even realize it was an operating business, let alone one that exports high value aircraft components to over 40 countries.

Airglas founder Wes Landes started building and selling skis for bush planes in 1955, four years before statehood. Landes had been an aircraft mechanic in the Air Corps during WWII. At the time, high quality skis for aircraft—a necessity for Alaska bushplanes—were hard to find. Today Airglas makes skis, cargo pods, fuel tanks, and other parts for dozens of types of aircraft. They use fiberglass, carbon fiber, and modern composite materials not available to Landes in the 1950s. They sell to US and overseas militaries, commercial operators, and private pilots.

Touring the shop recently with manager Jim Hammer, I was struck to learn that this small shop on O’Malley Road is a global leader in its niche. Hammer says that while a few companies in the Lower 48 make aircraft skis, Airglas doesn’t really have direct competitors across most of their product lines. When the Japanese Armed Forces need carbon fiber skis for their Apache helicopters, there’s really only one place on the globe to turn.

This is a quintessential example of an economic specialization. Alaskans are deeply familiar with our state’s reliance on aviation. We have more pilots per capita than any state, and Lake Hood is the world’s largest seaplane base. Aircraft are as important to many Alaska communities as cars are in the Lower 48. But how does all of that translate into an economic opportunity for Alaska?

It’s helpful to consider all the reasons goods are not manufactured in Alaska. The cost of freight is certainly one factor, along with our small market size. With only 740,000 people, Alaska is a tiny market for most types of products. It’s better to make cars closer to the 320 million people that live in the 48 contiguous states, for instance.

In some important respects, aviation reverses this dynamic. Alaska is a surprisingly large and concentrated market with all of those private pilots and commercial air carriers. Specialty aviation businesses like Airglas can thrive in Alaska in a way that wouldn’t be likely in Iowa or Connecticut. With a stable customer base here in their home state, they have the economies of scale to serve aviators all over the world.

Our research on Alaska’s aviation economy will be an installment in our Emerging Sector Series in partnership with the Division of Economic Development. We’re excited to keep peeling back the layers to find more of these innovative businesses!